Financial literacy: Top tips for SMEs, traders

Financial literacy is a vital aspect of managing a small business. It is a fundamental part of the foundation upon which a business is built. The better financially educated business owners are, the stronger the foundation of their business will be, says Zunaid Miya, managing director of Hello Pay, a South African fintech company.

Miya highlighted the importance of financial literacy for small business owners and gave tips on how to set your small business up for success.

One of the key tips provided by Miya is to stay on trend. Technology is advancing rapidly in all fields, including finance. Digital banking and payment services have become widely accessible, making it simpler and cost-effective for small businesses and informal traders to manage their finances.

These digital solutions provide businesses with access to basic financial services such as receiving and making payments, without incurring high costs or requiring complex infrastructure.

Additionally, digital payment solutions offer more transparent and efficient record-keeping, reducing the risk of financial fraud and improving overall financial management. These solutions can improve the financial stability of small businesses, increase their sales, and provide a more convenient payment option for customers.

Another important tip provided by Miya is to not exclude yourself from formal financial services. Some business owners may assume that financial products and services are only reserved for higher-income individuals and formalised businesses.

However, such misconceptions can be harmful, leading to fewer opportunities for personal and business growth as well as increased risk. By avoiding formalised financial services, small business owners are excluding themselves from the opportunities that these services present. It is crucial to understand the options available and make informed decisions.

Miya also advises small business owners to not fear all debt. There are different kinds of debt – good debt and bad debt. Good debt can improve the financial standing of a business by leading to increased income and wealth, job opportunities for the community, and an enriched economy.

On the other hand, bad debt is often unnecessary and can lead to a debt trap where the borrower is exploited by microlenders and loan sharks.

It is crucial to make informed decisions when taking on debt and ensure that it can improve your standing in the long run.

Finally, Miya advises small business owners to think long-term. It is important not to have tunnel vision when faced with business expenses. Payment devices are an excellent example of this. Small businesses may avoid these machines due to the upfront cost, but offering customers these payment solutions can boost sales and lead to lower transaction rates in the long run. It is essential to take the bigger picture into account when making financial decisions.

Hello Pay forms part of a larger ecosystem, the Hello Group. The company has been creating game-changing integrated consumer and business services within the telecommunications and financial business sector for communities in South Africa and internationally since 2005. Hello Pay meets the merchant needs of enterprises across South Africa.

In conclusion, financial literacy is a crucial aspect of managing a small business. Small business owners must be financially literate to make informed financial decisions and set up their businesses for success.

Miya believes Hello Pay’s tips provide useful guidance for small business owners looking to improve their financial literacy and set their businesses up for success. Staying on trend, not excluding oneself from formal financial services, understanding good and bad debt, and thinking long-term are some of the key tips to consider when managing your small business finances.

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